Windows Vista sales figures daunt Apple

Microsoft touted the breakneck pace of Windows Vista sales on Monday, pointing to the dramatic improvement over XP's early figures and creating an imposing benchmark for Mac OS X Leopard's initial success.

The Redmond company was keen to report the positive uptake on its new operating system, claiming that over 20 million copies had traded hands worldwide in the month since the official Vista release on January 30th.

Those figures easily doubled the numbers managed by Windows XP, which itself had record sales of 17 million units in the two months after its release in October 2001. Putting the company's success in perspective, however, Windows marketing director Bill Mannion noted that the results were good but not out of line with his employer's goals.

"It's a little bit better than what we were expecting," he said.

Microsoft's new statistics seemingly canceled out its earlier cautious stance, which had been pragmatic at best: just last month, company CEO Steve Ballmer had labeled investment groups' predictions "optimistic" and warned that Vista was primarily the firm's way of sustaining marketshare.

Nevertheless, the sales will prove a potential barrier to Apple's own quest for a greater piece of the market. Upon its release in 2005, Mac OS X Tiger's success managed only a tenth of its Windows XP rival, selling 2 million copies in its first four weeks. Roughly 7 million copies were sold in the year as a whole.

Further emphasizing the challenges faced by Apple are the company's demographics. The computer maker reported 19 million active users of Mac OS X at last year's WWDC gathering — meaning that Apple's entire user base could fit into less than a single month of Microsoft's most recent OS customers. A reported swelling of the former's ranks to 22 million this month, according to analysts' estimates, would still be overshadowed by Windows.

Without immediate evidence of Vista floundering in its intial sales, Apple's long-term success will therefore depend more than ever on Mac OS X Leopard's release in the spring to boost its stake in the computer business, possibly riding the coattails of Vista towards its own sales spike.

"We like how Vista has established a 'hardware upgrade mindset' among PC users," said ThinkEquity analyst Jonathan Hoopes earlier this month. "And we expect Apple CPU unit shipments to benefit from Vista tailwinds [and] the release of Leopard."

The numbers quoted by Microsoft include all sales of new PCs that came with Vista preinstalled, as well as people who purchased Vista-ready PCs in December and January that came with free upgrade coupons.

This doesn't sound to me like a lot of people have shelled out hundreds of bucks for Vista in a box to put on their existing PC. It just sounds like people have continued to buy PCs, which constitute about 96% of the market. No big surprise there. As the news reports say, this has not caused a bump in hardware sales. It's just business as usual.

"We like how Vista has established a 'hardware upgrade mindset' among PC users," said ThinkEquity analyst Jonathan Hoopes earlier this month."

Does he expect this new mindset to boost Mac sales? I wonder if this analyst ever saw the latest Apple commecials --
how about the one that says that only PC users need to worry about the "major surgery" of hardware upgrades...

"Given that the PC market has almost doubled since XP launched, Vista sales "probably should be more," said Michael Silver, vice president of research at Gartner, a technology research group.

Silver said 51 million PCs were sold to consumers worldwide in 2002; this year, the research group predicts 96 million consumers will buy a computer.

The analyst also noted that the number of holiday-season upgrades, which actually represents a backlog, rather than new sales since Vista's end-of-January launch, could take some wind out of Microsoft's sails.

Silver estimates PC makers sold between 12 million and 15 million PCs with Windows XP Home Edition over the holidays. While Microsoft wouldn't say how many Vista upgrades were ordered in that time frame, Dell Inc. spokesman Bob Kaufman said about two-thirds of its holiday PC shoppers registered for the upgrade.

"That would say that those (Vista sales) numbers aren't all that great if that includes all that backlog," said Silver.

Shipments of Vista to U.S. retailers in February lagged XP's first-month shipments by about 56 percent, according to the NPD Group, which tracks retail software sales."

In other words, Microsoft are being a little economical with the truth in their press release. I don't think anyone at Apple is 'daunted' just yet.

Shall22's quotes from the AP story hit the nail on the head. If you look a bit inside the numbers, you'll see that Vista sales are actually struggling quite a bit, despite what Microsoft is trumpeting.

It's quite telling that first month Vista shipments are 56% less than where XP was at the same stage. And while 20 million sounds impressive on the surface, when you factor in that 60-75% of those "sales" are via upgrade coupon redemptions for free or heavily discounted copies, that doesn't sound good for Microsoft at all.

If anything, Apple should be encouraged rather than daunted by these numbers.